A proposed trust agreement for oil and gas royalties has been sent by Adrian City Administrator Dane Nelson to Adrian City Commission members for their consideration.

Under the proposed agreement, oil and gas royalties collected by the city would go into the trust, which would be established with First Federal Bank.

The trust would be irrevocable.

According to the proposed agreement, First Federal Bank would distribute to the city no more than 5 percent of the trust estate annually.

The draft trust agreement calls for no expenditures from the trust through May 24, 2016, except for administration expenses and fees due to the trustee, First Federal Bank.

In an email dated Sept. 20 to Mayor Greg DuMars and city commissioners, Nelson said he wanted to give them plenty of time to review the proposed trust before the next city commission meeting, when the trust would be on the agenda.

That meeting would be Oct. 7.

In his email, Nelson said he drafted the proposed trust to be consistent with the city's strategic plan. That plan, which was unanimously adopted by the city commission Aug. 19, calls on the city to "create an endowment with proceeds from oil and gas leases, which would include no spending for three years" and "no invasion of principal ever."

The strategic plan calls for the proceeds from the endowment to be spent on "capital projects or one-time expenditures."

The Daily Telegram reached several city commissioners about the proposed trust.

— Commissioner Milo Warren said he believes the proposal is consistent with the strategic plan and he is comfortable with an irrevocable trust, but added: "You always kind of hate to (say) 100 percent 'Yes,' because you never know when some situations would change, but I think that would be good."

— Commissioner Jerry Gallatin said he believes the proposal is consistent with the strategic plan and he is comfortable with an irrevocable trust.

— Commissioner Charles Jacobson said the proposed trust is consistent with the city's strategic plan. "We didn't think it was a smart thing to do to try to balance the books with that money," Jacobson said.

Jacobson said he believes the trust should be irrevocable so the money is not "nickeled and dimed."

"I kind of want to keep that there where there is going to be money ... for everyone forever," he said.

— Commissioner Cary Carrico said he believes the proposed trust is consistent with the city's strategic plan, but thinks there should be something that would allow the irrevocability to be changed later by a vote of the people or a super-majority of the commission.

"I don't know that I'm OK with it being a 100 percent irrevocable trust," Carrico said.

— Commissioner Julie Berryman Adams said that few details of a possible trust were discussed when the commission approved the strategic plan. "I have quite a few questions," Adams said.

Page 2 of 2 - Adams said she does not think the commission should vote on the proposed trust until after all of three scheduled public meetings to talk about a proposed Headlee Amendment override on the Nov. 5 ballot. In announcing the meetings, the city said the use of oil and gas royalties also was expected to be discussed at the meetings.

She also is not sure about putting taxpayer money into an irrevocable trust, tying the hands of future commissioners, Adams said.

"That is something that I would struggle with," Adams said.

Attempts Friday and Saturday evening to reach DuMars and commissioner Tom Faulhaber were not successful.

The first public meeting to present information about the proposed Headlee override will take place at 7 p.m. Tuesday at Lincoln Elementary School. The other two meetings will be Oct. 9 at Michener Elementary School and Oct. 17 at Alexander Elementary School. Those meetings also begin at 7 p.m.